I speak rudimentary Japanese, but understand a lot more, and that's cause I'm somewhat antisocial, I prefer staying at home and doing my own thing most times, I teach English to students that want to speak English, my co-workers all speak English, and my family speaks or at least understand English (I speak to my son in English, but he usually responds in Japanese).
I have been here eleven years, and I just can't sit down and get into studying Japanese from a textbook all by myself, but were I able to get a teacher (I had one for a short time, but then she moved to China, and other Japanese teachers are just too busy, and my schedule doesn't allow me to attend any set classes), I would have little trouble picking up Japanese.
It's actually quite common for children of immigrants (both mother and father are from China or India or some other place) to speak the parent's native tongue very well, till they enter elementary school, after which they understand their parent's native tongue but forget how to speak it well. My father's business partner, a second generation Japanese, is now studying Japanese for his trips back to Japan.
In short, I'm a lazy bastard, but my Japanese really did improve quite a bit when all my co-workers were Japanese Elementary school teachers who mostly didn't speak English. I learned a lot more Japanese in the last five years because I had to than in the first six years I was here. I am considering going Mike Cash's way and getting a job that's not related to teaching English just to experience a different kind of job here, and also that it's more stable than my assortment of part time jobs and private students I have at this time.
Refusing to speak the language was what one school did, all the teacher's decided they simply would stop their ears to Japanese with the idea that they would create the need for their students to speak English. Dunno how well that worked, but the article said at the end of one year, they only knew one word in Japanese. Personally I find it useful to help beginner students if I explain the meaning or give background info on something I'm teaching in Japanese.